Islamic
CIMB Islamic Asia Pacific Equity Fund (formerly Asia Pacific Adil Fund)
CIMB Islamic Balanced Growth Fund (formerly Lifetime Dana Barakah)
CIMB Islamic Enhanced Sukuk Fund (formerly Lifetime Dana Wafiq)CIMB Islamic Equity Aggressive Fund (formerly Lifetime Dana Mubarak)
CIMB Islamic Kausar Lifecycle Fund 2017CIMB Islamic Kausar Lifecycle Fund 2022CIMB Islamic Kausar Lifecycle Fund 2027CIMB Islamic Short Term Sukuk Fund (formerly Lifetime Dana Fayyad)
Wednesday, June 4, 2008
How To Select Unit Trust Funds?
There are many unit trusts funds from which to choose, but having considered the type of fund or funds most likely to meet your needs, you have already narrowed down your choices considerably.
The next logical step is to decide which unit trust fund to invest in.
What To Look For ?
A random check will confirm most, if not all, investors would look at the performance or investment results.
Unfortunately, it is impossible to predict a unit trust's future investment performance. This will depend on the type of fund, the general market trends and the investments which a fund manager picks.
Most managers would provide the past performance tables that normally show the total returns since inception or how much an initial investment made several years ago would be worth today with any income reinvested.
Look at the performance of the funds but do not pay too much attention to period of a year or less - external factors beyond the control of the managers may have influenced results - a high flyer may not stand the test of time. Ideally, a fund showing consistent performance over a long period, the longer the better.
Check the performance of a company's other funds to make sure that it was not just a bit of luck with one fund. Do not let another type of fund take your fancy just because it has produced better results than the one you had initially chosen. It may be more risky and may not meet your requirements.
However, be warned, past performance figures are no guarantee of the future. A fund that has performed well in the past may not do so in the future and vice versa. Go to Fund Performance for fund comparisons.
Do's and Don'ts of Choosing a Unit Trust Fund
Do
-Decide which type of unit trust fund meets your saving needs. -Shop around for a reliable unit trust company
-Check whether investment limits, frequency of income payments, etc, are suitable -Check past performance records
Don't
-Don't choose any unit trust fund just because its performance has been good, make sure it is the right fund for you.
-Don't pay too much attention to short term performance, good consistent performance over all periods is the best lead.
-Don't decide on a unit trust fund just because it has low charges, good performance is far more important -Don't borrow to invest in unit trust unless you are absolutely aware of the risk involved.
Choosing The Best Way To Invest In A Unit Trust
Most unit trust managers offer you a choice of ways to invest.
As A Lump Sum
The minimum lump sum investment in a unit trust is typically in the range of RM500 to RM2,000. There is no limit on how much you can save and invest in a unit trust, though if you are making a very large investment, it is usually advisable to spread your holdings among different funds so that you do not have all your eggs in one basket.
If you are worried that the stock market could fall back from a peak just as you invest your lump sum, you could consider investing it gradually through a regular savings plan.
Via A Regular Savings Plan
Regular savings plan allows investors to put in a set amount monthly to the unit trust of their choice. Usually the minimum initial amount is RM1000 though it may vary with fund managers. The minimum monthly additional investments usually start from RM100. This is a convenient way of saving, as monthly additional investments are usually paid through a bank's standing instructions.
The regular savings plan is also flexible since they are not tied to a particular period of time. This can enhance the returns from unit trust that performs reasonably well over a long period. An advantage of the regular savings plan is that they even out fluctuations in unit price. The same investment each month will buy more units when the price is lower and fewer when the prices are high. The effect of ringgit cost averaging, as it is called, is to make the overall cost of units slightly cheaper. Of course, another advantage is that you can cash in the whole lot or part of it without penalty on any business day. Regular savings plan can improve returns significantly in the long run.
For whom are unit trusts most suitable?
Unit trusts are a simple and convenient investment option for people who have a long-term investment horizon but do not have either the time, desire, or expertise to invest directly in financial markets.
Unit trusts can be particularly suitable for smaller, first time investors as they offer the opportunity to establish a broadly diversified portfolio of assets with a relatively small amount of money.
However, larger investors can also benefit from unit trusts as they provide access to the expertise of professional investment managers.
When you invest in a unit trust fund, your money buys 'units' in that fund, at a price that is struck for that particular day. Over the period in which you invest, the unit trust price will move up and down as the value of the investments with the unit trust fund rise or fall. Returns from a unit trust fund are typically calculated based on movements in the bid (or withdrawal) unit trust price and assume any income distributions paid to investors are reinvested in the fund as additional units.
Unit trusts can be particularly suitable for smaller, first time investors as they offer the opportunity to establish a broadly diversified portfolio of assets with a relatively small amount of money.
However, larger investors can also benefit from unit trusts as they provide access to the expertise of professional investment managers.
When you invest in a unit trust fund, your money buys 'units' in that fund, at a price that is struck for that particular day. Over the period in which you invest, the unit trust price will move up and down as the value of the investments with the unit trust fund rise or fall. Returns from a unit trust fund are typically calculated based on movements in the bid (or withdrawal) unit trust price and assume any income distributions paid to investors are reinvested in the fund as additional units.
Direct investment versus unit trust funds - 'pros' and 'cons'?
Once you have decide to invest, you have a choice of investing directly or through a unit trust fund. Which method is appropriate may well depend on your individual investment needs, however, using professional fund managers can generally provide better returns over the long-term.
Fund managers tend to outperform individual investors because:
-Their portfolios are constructed using a defined and consistent investment philosophy;
-Fund managers have a far greater access to quality information including company contacts, competitors and customers than do individual investors;
-Fund managers employ full-time investment professionals to monitor investment markets and the way economic developments affect these markets;
-The size of their portfolios generally means that fund managers can more easily reduce risk through greater diversification. They can also reduce risk by implementing sophisticated risk-management techniques involving the use of derivatives; and
-Fund managers have the economies of scale to reduce expenses through lower transaction costs. For example, fund managers generally pay much lower commissions to stockbrokers.
Fund managers tend to outperform individual investors because:
-Their portfolios are constructed using a defined and consistent investment philosophy;
-Fund managers have a far greater access to quality information including company contacts, competitors and customers than do individual investors;
-Fund managers employ full-time investment professionals to monitor investment markets and the way economic developments affect these markets;
-The size of their portfolios generally means that fund managers can more easily reduce risk through greater diversification. They can also reduce risk by implementing sophisticated risk-management techniques involving the use of derivatives; and
-Fund managers have the economies of scale to reduce expenses through lower transaction costs. For example, fund managers generally pay much lower commissions to stockbrokers.
Diversification:"Don't put all your eggs in one basket"
Whether you want to invest in shares or across a broad range of asset classes, unit trust funds provide you with one benefit that can be very hard for individual investors to achieve - diversification.
Diversifying across asset classes
One way of reducing risk over short periods of time is to spread your investment over a number of asset classes - commonly referred to as diversification. Or, as the saying goes, "don't put all your eggs in one basket". Why? Because different asset classes tend to experience good performance at different times. By avoiding having all your money in just one investment, the high returns you may receive from one investment can help you offset any poor performance that might be occurring in another, thus enhancing the consistency of returns.
Diversifying within asset classes
The benefits of diversification do not just occur if you are investing across asset classes- diversification should also occur within asset classes. For example, you may decide to diversify within shares by investing in some companies in the construction, properties, industrial and finance sectors. Alternatively, you may decide to diversify within fixed income assets by investing in corporate and government bonds with varying maturity dates
Diversifying across asset classes
One way of reducing risk over short periods of time is to spread your investment over a number of asset classes - commonly referred to as diversification. Or, as the saying goes, "don't put all your eggs in one basket". Why? Because different asset classes tend to experience good performance at different times. By avoiding having all your money in just one investment, the high returns you may receive from one investment can help you offset any poor performance that might be occurring in another, thus enhancing the consistency of returns.
Diversifying within asset classes
The benefits of diversification do not just occur if you are investing across asset classes- diversification should also occur within asset classes. For example, you may decide to diversify within shares by investing in some companies in the construction, properties, industrial and finance sectors. Alternatively, you may decide to diversify within fixed income assets by investing in corporate and government bonds with varying maturity dates
Frequently Asked Question- CIMB Principal
Can I invest my EPF savings with CIMB-Principal Asset Management (CIMB-Principal)?
Yes, CIMB-Principal Asset Management is an approved funds management institution under the EPF Members Investment Scheme. You can invest up to 20% of the amount in excess of RM50,000 from your EPF Account 1 every 3 months.
Are the Funds' returns guaranteed?
No, returns of funds are not guaranteed as they invest in assets (for example, shares and bonds) which fluctuate in value on a daily basis. The price of the Funds' investments will rise and fall and consequently cause unit prices to rise and fall. Therefore, we cannot guarantee fund returns.How is the switching of Funds processed?
An investor will redeem out of Fund A at redemption/bid price and come in to Fund B at Fund B's Net Asset Value (NAV) rounded UP to the nearest quarter cent.
What prices do we apply in a switch?
Take for example, an investor who switches from Fund A to Fund B. The bid/buying price of Fund A will be used to convert the units to a Ringgit value amount. The NAV of Fund B will then be used to convert the value in Ringgit back to units of Fund B.
Why does the unit price fall after a distribution?
Income earned by the Fund during the financial year is accrued in its units price until the end of the distribution period. When an income distribution is declared, any interest income and realised capital profits are paid to unitholders. Consequently, the Fund's net asset value per unit, and therefore the application (offer) and withdrawal (bid) prices, will tend to fall by approximately the same amount as the income distribution.
If an investor chooses to reinvest their distributions, at what unit price and date will it be executed at?
The reinvestment of the distributions will be at the NAV price, after distribution payout, at the last business day of the year. The Income Plus Fund declares two distributions a year. Distributions are reinvested at the NAV price, after distribution payout, at the last business day in June and December.
What will happen to monies not claimed by investors - distribution or withdrawal?
Unclaimed monies - after 12 months, the Trustee will credit to the Consolidated Trust account and lodge it with the Registrar which will be held for a further 12 months to enable owners of the monies to collect.
Is there any exit fee when an investor withdraws his units?
No, there is no exit fee charged. The minimum withdrawal amount is RM1,000. Payment will be made within 10 business days.
Is there a regular investment plan?
Yes, the CIMB-Principal Easy Investment Plan allows you to make regular monthly investments of RM100 or more direct from your bank account. The minimum initial investment for the Easy Investment Plan is RM1,000.
Yes, CIMB-Principal Asset Management is an approved funds management institution under the EPF Members Investment Scheme. You can invest up to 20% of the amount in excess of RM50,000 from your EPF Account 1 every 3 months.
Are the Funds' returns guaranteed?
No, returns of funds are not guaranteed as they invest in assets (for example, shares and bonds) which fluctuate in value on a daily basis. The price of the Funds' investments will rise and fall and consequently cause unit prices to rise and fall. Therefore, we cannot guarantee fund returns.How is the switching of Funds processed?
An investor will redeem out of Fund A at redemption/bid price and come in to Fund B at Fund B's Net Asset Value (NAV) rounded UP to the nearest quarter cent.
What prices do we apply in a switch?
Take for example, an investor who switches from Fund A to Fund B. The bid/buying price of Fund A will be used to convert the units to a Ringgit value amount. The NAV of Fund B will then be used to convert the value in Ringgit back to units of Fund B.
Why does the unit price fall after a distribution?
Income earned by the Fund during the financial year is accrued in its units price until the end of the distribution period. When an income distribution is declared, any interest income and realised capital profits are paid to unitholders. Consequently, the Fund's net asset value per unit, and therefore the application (offer) and withdrawal (bid) prices, will tend to fall by approximately the same amount as the income distribution.
If an investor chooses to reinvest their distributions, at what unit price and date will it be executed at?
The reinvestment of the distributions will be at the NAV price, after distribution payout, at the last business day of the year. The Income Plus Fund declares two distributions a year. Distributions are reinvested at the NAV price, after distribution payout, at the last business day in June and December.
What will happen to monies not claimed by investors - distribution or withdrawal?
Unclaimed monies - after 12 months, the Trustee will credit to the Consolidated Trust account and lodge it with the Registrar which will be held for a further 12 months to enable owners of the monies to collect.
Is there any exit fee when an investor withdraws his units?
No, there is no exit fee charged. The minimum withdrawal amount is RM1,000. Payment will be made within 10 business days.
Is there a regular investment plan?
Yes, the CIMB-Principal Easy Investment Plan allows you to make regular monthly investments of RM100 or more direct from your bank account. The minimum initial investment for the Easy Investment Plan is RM1,000.
Market Overview
Share Market
Malaysian GDP growth forecast of 6.3% for 2008 will be sustained by domestic consumption and implementation of projects under the 9th Malaysia Plan.
Following upgrades of the Plantation Sector, earnings growth for 2008 has hit 16.5% with PER at 13.5x. Further, Bursa Malaysia earnings are defensive. Plantation Sector earnings are driven by CPO prices while that of Oil & Gas are driven by expenditure by Petronas. Higher oil and CPO prices will provide continued interest in plantations and oil related stocks.
As such, our portfolios continue to overweight Plantation, Oil & Gas and Building Material Sectors.
Global Equity Markets
Global equity markets are getting increasingly concerned over a possible recession in the US following the release of lower than expected job creation numbers in November and increase in the unemployment rate from 4.7% to 5.0%.
Earnings in Asia may have de-coupled to some extent from the US but exports will still be affected by the US slowdown. Therefore, domestic investment themes dominate throughout Asia.
Regional portfolios will keep to these themes while riding out the continued volatility in regional markets.
Fixed Income
The Malaysian sovereign bond market was in a brief correction mode triggered by a heavy sell down of the 20-year MGS in the 4th quarter.
In the absence of offshore players and US dollar weakness, the strengthened Ringgit did not help revive the bearish outlook in the sovereign bonds in the fourth quarter. Investors preferred to stay sidelined due to higher inflation expectations in 2008.
Aside from the year end window dressing activities, the local corporate bond market was generally cautiously traded in the 4th quarter.
Malaysian GDP growth forecast of 6.3% for 2008 will be sustained by domestic consumption and implementation of projects under the 9th Malaysia Plan.
Following upgrades of the Plantation Sector, earnings growth for 2008 has hit 16.5% with PER at 13.5x. Further, Bursa Malaysia earnings are defensive. Plantation Sector earnings are driven by CPO prices while that of Oil & Gas are driven by expenditure by Petronas. Higher oil and CPO prices will provide continued interest in plantations and oil related stocks.
As such, our portfolios continue to overweight Plantation, Oil & Gas and Building Material Sectors.
Global Equity Markets
Global equity markets are getting increasingly concerned over a possible recession in the US following the release of lower than expected job creation numbers in November and increase in the unemployment rate from 4.7% to 5.0%.
Earnings in Asia may have de-coupled to some extent from the US but exports will still be affected by the US slowdown. Therefore, domestic investment themes dominate throughout Asia.
Regional portfolios will keep to these themes while riding out the continued volatility in regional markets.
Fixed Income
The Malaysian sovereign bond market was in a brief correction mode triggered by a heavy sell down of the 20-year MGS in the 4th quarter.
In the absence of offshore players and US dollar weakness, the strengthened Ringgit did not help revive the bearish outlook in the sovereign bonds in the fourth quarter. Investors preferred to stay sidelined due to higher inflation expectations in 2008.
Aside from the year end window dressing activities, the local corporate bond market was generally cautiously traded in the 4th quarter.
Power of Compound Interest
Let's look at the difference in how much you would have if you started today, compared with how much you would have if you start in 3 years' time? Assumptions: Invest RM1,000 initially then RM100 per month at the end of each month. Return 8%p.a. compounded monthly. No allowance for inflation. If you start investing now, then 10 years from now you would have RM20,171. If you started in 3 years time you would have just RM12,808. But the compound interest is the really amazing thing. This is shown in yellow on the chart. If you start now then in 10 years you will have earned RM7,131 compound interest, but if you wait just 3 years to start investing you will have earned RM3,408 - less than half as much! And the longer you are investing for, the greater the difference in compound interest. Over 30 years, starting in 3 years means you miss out on more than RM30,000 of compound interest!
The Secret to Wealth
Whether you want to invest in shares or across a broad range of asset classes, unit trust funds provide you with one benefit that can be very hard for individual investors to achieve - diversification.
Many people invest but only some become wealthy. Why?
The mistake many people make when investing is that they treat their investment as saving.
Saving Versus Investing
So what is the difference between saving and investing? Saving is what you do to build up funds for something, like a holiday, and when you have the amount saved you withdraw your capital from your investment and spend it on the holiday. After the holiday you have nothing left, and start the process all over again.
But building wealth is different. People who want to build wealth invest their money for the long term in 'growth assets' such as shares and property.
Their strategy is to spend the income that the investment produces, but to leave the capital invested. They don't withdraw the capital, so it stays there growing and compounding, and producing more and more income each year.
If you do this it will take you quite a while longer initially to get to your investment goal, but in the long run you will find that the extra wait has been worth it. As the years go by, you will have an increasing additional income stream from your investments and your standard of living can rise accordingly!
Should I continue to retain capital in retirement?
Retaining your capital is a good strategy to use for wealth accumulation. Of course when you stop working later in life, your strategy may change. At that point it can often be beneficial to start drawing on some of your capital as well, whilst still ensuring that it will last for as long as you need it.
Many people invest but only some become wealthy. Why?
The mistake many people make when investing is that they treat their investment as saving.
Saving Versus Investing
So what is the difference between saving and investing? Saving is what you do to build up funds for something, like a holiday, and when you have the amount saved you withdraw your capital from your investment and spend it on the holiday. After the holiday you have nothing left, and start the process all over again.
But building wealth is different. People who want to build wealth invest their money for the long term in 'growth assets' such as shares and property.
Their strategy is to spend the income that the investment produces, but to leave the capital invested. They don't withdraw the capital, so it stays there growing and compounding, and producing more and more income each year.
If you do this it will take you quite a while longer initially to get to your investment goal, but in the long run you will find that the extra wait has been worth it. As the years go by, you will have an increasing additional income stream from your investments and your standard of living can rise accordingly!
Should I continue to retain capital in retirement?
Retaining your capital is a good strategy to use for wealth accumulation. Of course when you stop working later in life, your strategy may change. At that point it can often be beneficial to start drawing on some of your capital as well, whilst still ensuring that it will last for as long as you need it.
Tuesday, June 3, 2008
Fund Performance (Fund Fact Sheets)
Cimb Wealth Advisors
Islamic Fund
EQUITY
Local
CIMB Islamic DALI Equity Growth Fund (formerly known as SBB Dana Al-Ihsan)
CIMB Islamic Enhanced Index Fund (formerly known as SBB Dana Al-Hikmah)
CIMB Islamic Small Cap Fund (formerly known as SBB Dana Al-Azam)
Hybrid
CIMB Islamic DALI Equity Fund (formerly known as SBB Dana Al-Ihsan 2)
CIMB Islamic Equity Fund (formerly known as SBB Dana Al-Ikhlas)
FIXED INCOME
CIMB Islamic Sukuk Fund (formerly known as SBB Dana Al-Hafiz)
MIXED ASSET
Local
CIMB Islamic Balanced Income Fund (formerly known as SBB Dana Al-I'tidal)
Hybrid
CIMB Islamic Balanced Fund (formerly known as SBB Dana Al-Mizan)
Islamic Fund
EQUITY
Local
CIMB Islamic DALI Equity Growth Fund (formerly known as SBB Dana Al-Ihsan)
CIMB Islamic Enhanced Index Fund (formerly known as SBB Dana Al-Hikmah)
CIMB Islamic Small Cap Fund (formerly known as SBB Dana Al-Azam)
Hybrid
CIMB Islamic DALI Equity Fund (formerly known as SBB Dana Al-Ihsan 2)
CIMB Islamic Equity Fund (formerly known as SBB Dana Al-Ikhlas)
FIXED INCOME
CIMB Islamic Sukuk Fund (formerly known as SBB Dana Al-Hafiz)
MIXED ASSET
Local
CIMB Islamic Balanced Income Fund (formerly known as SBB Dana Al-I'tidal)
Hybrid
CIMB Islamic Balanced Fund (formerly known as SBB Dana Al-Mizan)
Six Simple Steps to Investing with CIMB Wealth Advisors
Step 1: Define your investment goals
Step 2: Decide your time horizon and risk tolerance
Step 3: Understand the products and decide what suits your investment portfolio
Step 4: Practise asset allocation
Step 5: Practise regular investment
Step 6: Review and rebalance your investment portfolio from time to time
Step 2: Decide your time horizon and risk tolerance
Step 3: Understand the products and decide what suits your investment portfolio
Step 4: Practise asset allocation
Step 5: Practise regular investment
Step 6: Review and rebalance your investment portfolio from time to time
List of The Syariah Fund
CIMB Principal's Syariah Funds
EQUITY
Local
CIMB Islamic Equity Aggressive Fund (formerly known as Lifetime Dana Mubarak)
CIMB Islamic DALI Equity Theme Fund
Regional
CIMB Islamic Asia Pacific Equity Fund (formerly known as Asia Pacific Adil Fund)
Global
CIMB Islamic Global Equity Fund
Fixed Income
CIMB Islamic Enhanced Sukuk Fund (formerly known as Lifetime Dana Wafiq)
CIMB Islamic Short Term Sukuk Fund (formerly known as Lifetime Dana Fayyad)
Money Market
CIMB Islamic Money Market Fund
Mixed Asset
Local
CIMB Islamic Balanced Growth Fund (formerly known as Lifetime Dana Barakah)
Target-Date
CIMB Islamic Kausar Lifecycle Fund 2017
CIMB Islamic Kausar Lifecycle Fund 2022
CIMB Islamic Kausar Lifecycle Fund 2027
CIMB Wealth Advisors
SHARIAH FUNDS
EQUITY
Local
CIMB Islamic DALI Equity Growth Fund (formerly known as SBB Dana Al-Ihsan)
CIMB Islamic Enhanced Index Fund (formerly known as SBB Dana Al-Hikmah)
CIMB Islamic Small Cap Fund (formerly known as SBB Dana Al-Azam)
Hybrid
CIMB Islamic DALI Equity Fund (formerly known as SBB Dana Al-Ihsan 2)
CIMB Islamic Equity Fund (formerly known as SBB Dana Al-Ikhlas)
Fixed Income
CIMB Islamic Sukuk Fund (formerly known as SBB Dana Al-Hafiz)
Mixed Asset
Local
CIMB Islamic Balanced Income Fund (formerly known as SBB Dana Al-I'tidal)
Hybrid
CIMB Islamic Balanced Fund (formerly known as SBB Dana Al-Mizan)
Market Commentary for the week ended 30 May 2008
STOCKMARKET COMMENTARY
The decline in regional markets caused the KLCI to touch a 6-week intraday low of 1,260 points on Wednesday. However, better-than-expected 1Q2008 GDP growth for Malaysia and the U.S. helped the local market to close at 1,276.1 points to register a marginal gain of 0.1% for the week.
Average daily trading volume during the week was sustained at 0.5 billion units while average trading value increased to RM1.4 billion from RM1.3 billion in the preceding week.
On Wall Street, share prices rebounded due to better-than-expected U.S. GDP growth of 2.5% year-on-year for 1Q2008. On an annualised quarterly basis, GDP growth rose to 0.9% in 1Q2008 from 0.6% in 4Q2007. Sentiment was also lifted by the pull-back in oil prices from recent record highs of above US$130/brl. The Dow closed 1.3% higher at 12,638 points while the Nasdaq was up 3.2% at 2,523 points for the week due to gains in selected technology stocks.
U.S. GDP growth for 1Q2008 was sustained at 2.5% on a year-on-year basis. Investment spending remained weak and contracted by 3.2% in 1Q2008 compared to a decline of 3.7% in 4Q2007. Consumer spending growth eased to 1.9% in 1Q2008 from 2.6% in 4Q2007. On an annualised quarterly basis, GDP growth rose to 0.9% in 1Q2008 from 0.6% in 4Q2007 as investment spending declined at a slower pace than the previous quarter.
Crude oil prices eased to US$127.35/brl to register a weekly loss of 3.2% following news of an increase in U.S. oil inventories.
On the local front, Malaysia’s GDP growth moderated slightly to 7.1% in 1Q08 from 7.3% in 4Q2007 due to slower growth in investment spending. However, consumer spending rose to 11.8% in 1Q2008 from 10.2% in 4Q2007.
On the supply side, growth of the services sector eased to 8% in 1Q2008 compared to 9.3% in 4Q2007 while the manufacturing sector’s growth strengthened to 6.9% in 1Q2008 from 5.6% in 4Q2007. The agriculture sector’s growth increased to 6.3% in 1Q2008 from 4.7% in 4Q2007 on higher palm oil output. The mining sector’s growth rose to 3.7% in 1Q2008 from 3.5% in 4Q2007 amidst increased production of crude oil while the construction sector's growth picked up pace to 5.3% from 4.7% over the same period, supported mainly by infrastructure projects related to the oil & gas industry and the 9th Malaysian Plan.
The Ringgit depreciated by 0.6% over the week against the U.S. dollar to close at RM3.234 on 30th May 2008 on concerns over rising inflationary pressures. On a year-to-date basis, the Ringgit appreciated by 2.2% against the greenback.
Looking ahead, the local market is anticipated to continue moving in tandem with overseas markets over the near term. Investors will continue to monitor the outlook for economic growth and interest rates in the U.S.
At the KLCI’s closing level of 1,276.1 points on 30th May 2008, the local stock market is valued at a P/E of 15.6x on 2008 earnings which is at a discount of 7.5% to its 8-year average of 16.9x. The market is also supported by a gross dividend yield of 4.4% which compares favourably to Ringgit fixed deposit rates for tenures of less than one year.
REGIONAL STOCKMARKET COMMENTARY
For the week ended 30th May, Japan and South Korea markets registered gains of 2.3% and 1.3% respectively following news of sustained U.S. GDP growth for 1Q2008. However, the Taiwan market eased by 2.4% on profit taking.
With the exception of Singapore, markets in South-East Asia registered losses due to concerns over rising inflation. The Thai market sustained a decline of 4.8% due to uncertainties on the political front.
South Korea’s GDP growth for 1Q2008 was revised up to 5.8% compared to previous estimates of 5.7% (4Q2007: 5.7%) on the back of higher investment spending. Taiwan’s GDP growth eased to 6.1% in 1Q2008 from 6.5% in 4Q2007 due to slower growth in exports demand.
Thailand’s GDP growth rose to a 2-year high of 6.0% in 1Q2008 from 5.7% in 4Q2007 due to higher consumer and investment spending.
The outlook for regional equity markets will continue to depend on the trend in oil prices, the interest rate cycle in each respective market and the outlook for U.S. economic growth, interest rates and developments in the U.S. sub-prime mortgage market.
The decline in regional markets caused the KLCI to touch a 6-week intraday low of 1,260 points on Wednesday. However, better-than-expected 1Q2008 GDP growth for Malaysia and the U.S. helped the local market to close at 1,276.1 points to register a marginal gain of 0.1% for the week.
Average daily trading volume during the week was sustained at 0.5 billion units while average trading value increased to RM1.4 billion from RM1.3 billion in the preceding week.
On Wall Street, share prices rebounded due to better-than-expected U.S. GDP growth of 2.5% year-on-year for 1Q2008. On an annualised quarterly basis, GDP growth rose to 0.9% in 1Q2008 from 0.6% in 4Q2007. Sentiment was also lifted by the pull-back in oil prices from recent record highs of above US$130/brl. The Dow closed 1.3% higher at 12,638 points while the Nasdaq was up 3.2% at 2,523 points for the week due to gains in selected technology stocks.
U.S. GDP growth for 1Q2008 was sustained at 2.5% on a year-on-year basis. Investment spending remained weak and contracted by 3.2% in 1Q2008 compared to a decline of 3.7% in 4Q2007. Consumer spending growth eased to 1.9% in 1Q2008 from 2.6% in 4Q2007. On an annualised quarterly basis, GDP growth rose to 0.9% in 1Q2008 from 0.6% in 4Q2007 as investment spending declined at a slower pace than the previous quarter.
Crude oil prices eased to US$127.35/brl to register a weekly loss of 3.2% following news of an increase in U.S. oil inventories.
On the local front, Malaysia’s GDP growth moderated slightly to 7.1% in 1Q08 from 7.3% in 4Q2007 due to slower growth in investment spending. However, consumer spending rose to 11.8% in 1Q2008 from 10.2% in 4Q2007.
On the supply side, growth of the services sector eased to 8% in 1Q2008 compared to 9.3% in 4Q2007 while the manufacturing sector’s growth strengthened to 6.9% in 1Q2008 from 5.6% in 4Q2007. The agriculture sector’s growth increased to 6.3% in 1Q2008 from 4.7% in 4Q2007 on higher palm oil output. The mining sector’s growth rose to 3.7% in 1Q2008 from 3.5% in 4Q2007 amidst increased production of crude oil while the construction sector's growth picked up pace to 5.3% from 4.7% over the same period, supported mainly by infrastructure projects related to the oil & gas industry and the 9th Malaysian Plan.
The Ringgit depreciated by 0.6% over the week against the U.S. dollar to close at RM3.234 on 30th May 2008 on concerns over rising inflationary pressures. On a year-to-date basis, the Ringgit appreciated by 2.2% against the greenback.
Looking ahead, the local market is anticipated to continue moving in tandem with overseas markets over the near term. Investors will continue to monitor the outlook for economic growth and interest rates in the U.S.
At the KLCI’s closing level of 1,276.1 points on 30th May 2008, the local stock market is valued at a P/E of 15.6x on 2008 earnings which is at a discount of 7.5% to its 8-year average of 16.9x. The market is also supported by a gross dividend yield of 4.4% which compares favourably to Ringgit fixed deposit rates for tenures of less than one year.
REGIONAL STOCKMARKET COMMENTARY
For the week ended 30th May, Japan and South Korea markets registered gains of 2.3% and 1.3% respectively following news of sustained U.S. GDP growth for 1Q2008. However, the Taiwan market eased by 2.4% on profit taking.
With the exception of Singapore, markets in South-East Asia registered losses due to concerns over rising inflation. The Thai market sustained a decline of 4.8% due to uncertainties on the political front.
South Korea’s GDP growth for 1Q2008 was revised up to 5.8% compared to previous estimates of 5.7% (4Q2007: 5.7%) on the back of higher investment spending. Taiwan’s GDP growth eased to 6.1% in 1Q2008 from 6.5% in 4Q2007 due to slower growth in exports demand.
Thailand’s GDP growth rose to a 2-year high of 6.0% in 1Q2008 from 5.7% in 4Q2007 due to higher consumer and investment spending.
The outlook for regional equity markets will continue to depend on the trend in oil prices, the interest rate cycle in each respective market and the outlook for U.S. economic growth, interest rates and developments in the U.S. sub-prime mortgage market.
Concerns Of Most Prospective Investors
Why Isn't One Investment Plan Right For Everyone?
Before investing, decide what you want your investments to do. Investing is simply using money to make more money. Investment ringgit are not meant to be used for daily living essentials.
You might choose to invest in bank deposits, government bonds, securities, or life insurance. They are all different, and no single investment channel fits the needs of every individual. Neither can a single financial product fulfill all our needs at different stages of our lives.
Since most unit trusts or collective investments limit their investments to securities, let us explore some of the reasons why investors, both institutional and individuals, might want to own a unit trust. Many prefer unit trusts because they are easily bought and sold. They represent variety and flexibility of returns. Unit trusts can be bought at varying prices, from very low to very high, and small amounts can be invested at convenient intervals. Unit trusts can be selected, often with excellent results, by having limited investment background.
When investing in unit trusts, investors can profit in two ways. They may receive distributions. Since the market value of unit trusts fluctuates, investors also profit when selling their unit trusts in the event of substantial or marginal increase in value. However, fluctuation also means the value of your unit trust can go down in value. That is why unit trusts are recommended for medium to long-term investment programme. Regardless of which unit trust is selected, it should meet the investment goals. A basic rule is that it should not be done on impulse.
What About People Who Are Retired Or Have A Family?
Age is a strong consideration in investment decision. Notice how conservatism comes with age. With age, comes the awareness that a serious investment error could jeopardise the security that has taken years to accumulate. The closer the retirement, the fewer the years to rebuild.
Investment risk is quite different from gambling. Weighing risk based on facts is investing. Taking chances based on odds is gambling. The point is, age is an important factor in deciding risk.
Another strong consideration is responsibilities. A young individual beginning a career with the additional responsibility of one or more children must weigh these responsibilities. The most protection for the fewest ringgit should supercede any forced savings that would reduce family protection.
Financial needs change. How they are met should depend on our responsibility.
Why Should I Start Investing Today?
Today's decision should consider tomorrow's needs. There is a direct relationship between the amount of money you need to accumulate and the number of years you have to do it.
For example, if you plan to have a RM120,000 education fund, have 20 years to do it, and expect an annual rate of return of 12%, you have to invest only a little over RM120 a month. Wait 5 years, and with 15 years left you will need over RM240 a month. Procrastinate another 10 years, you will have to take almost RM1,470 each month!
Time can be a real asset when planning for a child's education or our retirement. The more time we have to save, the fewer ringgit we need now. Do not let time slip away.
What Are The Three Rules Of Investing?
There is no simple formula for successful investing. If there were, it would include three basic elements:
Understand what we buy
Buy value at a reasonable price
Be patient
Understanding is so basic, it is often neglected. Too often an investment is made with no total understanding of the transaction. It is vital to understand your investment - the good, the bad, the risks and the rewards. Fully comprehending the objective of any investment will help you be more comfortable.
Value buying demands both research and discipline. A stock may be judged undervalued for various reasons. If an industry is out of favor, the market value of the stocks within the industry might go lower but, if the fundamentals are still positive, it is an opportunity for the investor to buy selectively as it is still a good value stock.
Patience is a vital ingredient of value investing. It could take several years for the value of your investment to materialise. This waiting period demands both patience and confidence. Most successful investors know it takes time for their investment to double, triple, and so forth. Professional managers generally agree that 5 years is reasonable.
Choosing A Professional Fund Manager : Why Can't I Do It Myself?
Put not your trust in money
But put your money in trust
Oliver Wendell Holmes
There are a lot of peolple who like to "do it their way" when it comes to investing. Right or wrong, they want to be captain of their ship. But not eveyone can or likes to be captain of their ship. Being a passenger has advantages. It is usually more comfortable and certainly less time consuming. When your investments are managed by someone else, you sit back and either reap the harvest or suffer the loss.
Bank deposits and insurance are the best known managed investments outside the securities area. They usually have some guarantee of principal or income, and the income is usually low with not much risk.
Where does that leave you if you want your money to not only produce a reasonable income now, but to also grow over the years?
The answer to your question is PROFESSIONAL FUND MANAGEMENT.....If you lack experience, time, financial resources, or courage to personally manage investments, or if you believe others can get better results, this is the way to go.
Selecting The Right Unit Trust - How Do I Find A Unit Trust That Fits My Objective?
It used to be simple selecting a unit trust. Today, there are a multitude of different unit trust funds competing for investment ringgit. Perhaps a simpler way is to first identify your investment objectives. If you want your money to grow a larger sum in the future to pay for an objective and your risk tolerance is higher, you may choose a growth fund to do the job. On the other hand, if you need an ongoing income stream to pay for expenses and your risk tolerance is low, a better choice may be a bond fund. You may have different investment objectives, risk tolerance and time horizons at any one time, which warrants owning a mixture of different unit trust funds for different investment purposes.
Why Do I Have To Spend All That Time Reading A Prospectus?
Before investing in any unit trust, read the prospectus. It's required that you get one, so if it's not offered, ask for it!
A prospectus is your protection contract. It tells you all you need to know about the fund. If you plan to own the fund, you will want to know how your money will be invested.
The prospectus is a blueprint of the fund. It tells what the fund managers can and cannot do with your money. It describes risk and limits, and the amount of risk the fund is allowed to take. It tells you whether the purpose of the fund is to make profit as quickly as possible or to make only reasonable gains while first bringing in income and protecting your principal.
Many investors who are in a hurry to reach their goal, take the shortcut of not reading the prospectus. This could jeopardise your investing decisions. Read the prospectus. Arm yourself with sufficient information to make an 'informed decision'. It prepares you for what lies ahead.
Risk and Return?
There is a trade-off between risk and return. Generally, the higher the level of risk you are prepared to accept when investing, the higher the potential return will be. It's human nature to want the highest return possible, so often the best way to choose a fund is to understand the level of risk associated with different investment types, and determine your risk comfort level ( Risk Profiler ).
Remember that the higher the potential return, the higher the potential loss may be, and that negative returns are possible for all investment types.
There are two principles to consider when working out your individual risk/return comfort level.
1.The length of time over which you will be investing.
2.The fact that investments which provide a higher return over a period of five years or more will typically have wider variations in return from year to year, and that over short periods of time (eg 1 year) the return may be negative.
Remember that a managed investment can reduce the inherent risks in most types of investments through the use of diversification.
Remember that the higher the potential return, the higher the potential loss may be, and that negative returns are possible for all investment types.
There are two principles to consider when working out your individual risk/return comfort level.
1.The length of time over which you will be investing.
2.The fact that investments which provide a higher return over a period of five years or more will typically have wider variations in return from year to year, and that over short periods of time (eg 1 year) the return may be negative.
Remember that a managed investment can reduce the inherent risks in most types of investments through the use of diversification.
Why Do You Need to Invest in Unit Trust?
Why Choose Unit Trust?
With the proliferation of various types of investment products in recent years, people often look for a straight forward, professionally managed investment opportunity that caters for basic investment needs. Public Mutual Berhad has succeeded in meeting those needs with its unit trust funds.
Children's Education
Unit trust can help you to cover the spiralling cost of education for your children or grandchildren. The sooner you start your plan, the lesser will be the burden. Time can be your greatest ally. Go to Education Planning for more details.
Home Ownership
Unit trust can help you to pay off your mortgage earlier, purchase a bigger house or upgrade your existing house. As with any plan, start early. Many bricks build a castle. Go to Home Ownership Planning for more details.
Retirement
Growing old and retiring is inevitable. It is never too early to plan for retirement even though you have the comfort of the Employees' Provident Fund (EPF). You have the right and choice to retire in dignity. Retire comfortably. Plan a nest for your retirement home, orchard and the likes. Unit trust can help do the job. Go to Retirement Planning for more details.
Cash Reserves
The only certainty in life is the uncertainty or unexpected emergencies. Unit trust can help you to set aside some cash for rainy days.
Regardless of your own needs and wants, unit trust makes sense, for potential return and security.
With the proliferation of various types of investment products in recent years, people often look for a straight forward, professionally managed investment opportunity that caters for basic investment needs. Public Mutual Berhad has succeeded in meeting those needs with its unit trust funds.
Children's Education
Unit trust can help you to cover the spiralling cost of education for your children or grandchildren. The sooner you start your plan, the lesser will be the burden. Time can be your greatest ally. Go to Education Planning for more details.
Home Ownership
Unit trust can help you to pay off your mortgage earlier, purchase a bigger house or upgrade your existing house. As with any plan, start early. Many bricks build a castle. Go to Home Ownership Planning for more details.
Retirement
Growing old and retiring is inevitable. It is never too early to plan for retirement even though you have the comfort of the Employees' Provident Fund (EPF). You have the right and choice to retire in dignity. Retire comfortably. Plan a nest for your retirement home, orchard and the likes. Unit trust can help do the job. Go to Retirement Planning for more details.
Cash Reserves
The only certainty in life is the uncertainty or unexpected emergencies. Unit trust can help you to set aside some cash for rainy days.
Regardless of your own needs and wants, unit trust makes sense, for potential return and security.
What Are The Risks?
All investments involve varying degree of risk. There are many possible outcomes associated with an investment and there are a multitude of factors, many beyond the control of investors that affect investment returns. Below is an outline of the major risks faced by investors in general, and Commerce Asset Fund Managers (CAFM) approach to managing these risks within the Funds.
Market Risk
Interest Rate Risk
Company or Security Specific Risk
Inflation Risk
Liquidity Risk
Loan Refinancing Risk
Compliance Risk
Market Risk
Market risk is the risk of negative movements that affect the price of all assets in a particular capital market. The factor influencing the performance of the markets include : Economic and Financial market conditions Political changes Broad investor sentiment Movements in interest rate and inflation An example of such a negative impact would be a fall in the value of shares on the Malaysian share market as a result of a contraction in the economy
Interest Rate Risk
Interest rates are inclined to fluctuate over time. A rise in the general level of interest rates will result in a decline of the value of the value of all bonds and fixed interest securities. Company or Security Specific RiskThere are many specific risk, which apply to individual companies or securities. Examples include the possible effect on a company of losing a key executive, or the unforeseen entry of a new competitor into the market. Other risks which apply to individual bond and fixed interest securities include the potential for a company to default on the repayment of the coupon and / or principal of its fixed interest securities, or the implications of a company's credit rating being downgraded. It is not possible to anticipate all company or security specific risks. However, CAFM seeks to identify potential risks, prior to investing, through their process. All investments are then monitored closely to enable its fund managers to assess changes in circumstances and, where necessary, alter the Fund's exposure.Top
Inflation RiskInflation risk is the potential loss of purchasing power of your investment due to a general increase of consumer prices. Inflation erodes the real rate of your return, that is, the return after you take away the inflation rate.
Liquidity Risk
Where the Funds invest in bonds, the Funds are exposed to liquidity risk given the fact that the Malaysian bond market is not as liquid as its sharemarket. As a result, it may not always be possible to immediately sell or buy fixed income securities at the prevailing market price. In order to mitigate this risk, CAFM actively manages the maturity structure of the portfolio. Investment in illiquid private debt securities will only be considered when commensurate with attendant risks. Factors such as the issue size of the bond, the issuers' total debt outstanding and sector limits are also taken into consideration to mitigate liquidity risk.
Loan Refinancing Risk
Borrowing to invest can multiply the effect of an increase or decrease in the value of your investment. If the value of your investment falls below a certain level, you may be asked by the financial institution to reduce the outstanding loan amount to the required level. Your borrowing cost may also vary from time to time depending on the fluctuations in interest rates. We suggest that you carefully assess the risks of using loan financing in light of your investment objectives, attitude to risk and financial circumstances before borrowing to invest in the Funds.
Compliance Risk
A lack of fiduciary care by a management company to uphold the interests of its unit holders poses a risk to investors. To ensure that compliance with all the applicable requirements are met at all times, sufficient internal controls must be in place to protect the interests of the unit holder. In order to manage this risk, CIMB-Principal Asset Management has a dedicated compliance procedures to ensure that the Deed, prospectus, SC Guidelines and securities laws are adhered to at all times by the investment manager and Unit Trust Manager.
Market Risk
Interest Rate Risk
Company or Security Specific Risk
Inflation Risk
Liquidity Risk
Loan Refinancing Risk
Compliance Risk
Market Risk
Market risk is the risk of negative movements that affect the price of all assets in a particular capital market. The factor influencing the performance of the markets include : Economic and Financial market conditions Political changes Broad investor sentiment Movements in interest rate and inflation An example of such a negative impact would be a fall in the value of shares on the Malaysian share market as a result of a contraction in the economy
Interest Rate Risk
Interest rates are inclined to fluctuate over time. A rise in the general level of interest rates will result in a decline of the value of the value of all bonds and fixed interest securities. Company or Security Specific RiskThere are many specific risk, which apply to individual companies or securities. Examples include the possible effect on a company of losing a key executive, or the unforeseen entry of a new competitor into the market. Other risks which apply to individual bond and fixed interest securities include the potential for a company to default on the repayment of the coupon and / or principal of its fixed interest securities, or the implications of a company's credit rating being downgraded. It is not possible to anticipate all company or security specific risks. However, CAFM seeks to identify potential risks, prior to investing, through their process. All investments are then monitored closely to enable its fund managers to assess changes in circumstances and, where necessary, alter the Fund's exposure.Top
Inflation RiskInflation risk is the potential loss of purchasing power of your investment due to a general increase of consumer prices. Inflation erodes the real rate of your return, that is, the return after you take away the inflation rate.
Liquidity Risk
Where the Funds invest in bonds, the Funds are exposed to liquidity risk given the fact that the Malaysian bond market is not as liquid as its sharemarket. As a result, it may not always be possible to immediately sell or buy fixed income securities at the prevailing market price. In order to mitigate this risk, CAFM actively manages the maturity structure of the portfolio. Investment in illiquid private debt securities will only be considered when commensurate with attendant risks. Factors such as the issue size of the bond, the issuers' total debt outstanding and sector limits are also taken into consideration to mitigate liquidity risk.
Loan Refinancing Risk
Borrowing to invest can multiply the effect of an increase or decrease in the value of your investment. If the value of your investment falls below a certain level, you may be asked by the financial institution to reduce the outstanding loan amount to the required level. Your borrowing cost may also vary from time to time depending on the fluctuations in interest rates. We suggest that you carefully assess the risks of using loan financing in light of your investment objectives, attitude to risk and financial circumstances before borrowing to invest in the Funds.
Compliance Risk
A lack of fiduciary care by a management company to uphold the interests of its unit holders poses a risk to investors. To ensure that compliance with all the applicable requirements are met at all times, sufficient internal controls must be in place to protect the interests of the unit holder. In order to manage this risk, CIMB-Principal Asset Management has a dedicated compliance procedures to ensure that the Deed, prospectus, SC Guidelines and securities laws are adhered to at all times by the investment manager and Unit Trust Manager.
How Unit Trust Is Priced ?
In order to accelerate growth and enhance investor protection in the unit trust industry, on 1 July 2007, the Securities Commission introduced a Single Pricing Regime (SPR) whereby there will only be one price - the Net Asset Value (NAV) per unit - quoted for selling and redeeming unit trusts.
The Single Pricing Regime was introduced to ensure full transparency and disclosure of up-front costs. Unlike the previous dual pricing regime where prices were quoted inclusive of charges, single pricing regime will reflect only the Net Asset Value (NAV) of a unit trust fund while all charges will be separately disclosed. The enhanced transparency of prices and charges will allow investors to compare the costs of investing in unit trusts associated with different distribution channels and should lead to a more competitive cost environment.
Your question will be?
With the new ruling, how many units will you be entitled to and how much shall you pay for your investment?
This example serves only as a guideline on how the calculation is done assuming the fund’s NAV per unit is RM0.2500 and the investment amount is RM5,000.00
Units credited to your account:
= Amount invested /NAV per unit
= RM5,000/RM0.2500
= 20,000 units
Service charge per unit:
= NAV per unit x Service Charge (%)
= RM0.2500 x 5.45%*
= RM0.013625
* assuming service charge is @5.45%
Total service charge incurred:
= Service charge per unit x Units credited to investor
= RM0.013625 x 20,000 units
= RM272.50
Finally in progression of the above, the total amount you should pay will be:
= Amount invested + Service charge incurred
= RM5,000 + RM272.50
= RM5,272.50
The Single Pricing Regime was introduced to ensure full transparency and disclosure of up-front costs. Unlike the previous dual pricing regime where prices were quoted inclusive of charges, single pricing regime will reflect only the Net Asset Value (NAV) of a unit trust fund while all charges will be separately disclosed. The enhanced transparency of prices and charges will allow investors to compare the costs of investing in unit trusts associated with different distribution channels and should lead to a more competitive cost environment.
Your question will be?
With the new ruling, how many units will you be entitled to and how much shall you pay for your investment?
This example serves only as a guideline on how the calculation is done assuming the fund’s NAV per unit is RM0.2500 and the investment amount is RM5,000.00
Units credited to your account:
= Amount invested /NAV per unit
= RM5,000/RM0.2500
= 20,000 units
Service charge per unit:
= NAV per unit x Service Charge (%)
= RM0.2500 x 5.45%*
= RM0.013625
* assuming service charge is @5.45%
Total service charge incurred:
= Service charge per unit x Units credited to investor
= RM0.013625 x 20,000 units
= RM272.50
Finally in progression of the above, the total amount you should pay will be:
= Amount invested + Service charge incurred
= RM5,000 + RM272.50
= RM5,272.50
Why Invest In Unit Trust?
Unit Trust investment offer a wide range of benefits when you compare to other investment alternatives such as direct shares, property, bonds and fixed deposit. The primary benefit is that they allow investors access to the capital markets through a convenient and easy to use investment vehicle, which they may not otherwise be able to access if investing directly themselves. More specifically the benefits include :
Diversification
Professional Investment Management
Liquidity
Flexibility
Ringgit Cost Averaging
Diversification
We all know that the best way to reduce risk is not to put all your eggs in one basket. This is especially true of investing in the sharemarket. If we invest in any one or two counters, a significant downward shift in one of these stocks will have a large impact on your total portfolios. By spreading your investments across a range of companies in different industries the risk of adverse movements on a particular stock hurting your overall portfolio return is minimized. Unit trust portfolios enable you to more easily reduce this stock specific risk by pooling your funds with others and investing them across a range of companies. One must be careful however not to invest too widely as this may actually reduce the potential to outperform the overall investment market. Modern portfolio theory suggests that 20-40 stocks is often enough to minimize portfolio risk in any given sharemarket
Professional Investment Management
Having investment professionals manage money for you, even if you only have a small amount of money to invest is probably the key benefit to investing in unit trusts. Most of us do not have the time to research the companies in which we might invest. As such if we are investing in the share market directly for ourselves we may be making decisions that are not that well informed. Professional unit trust fund manager however, devote all their time to researching and analysing the various investment markets and companies. Furthermore, as they usually have large sums to invest, they will often be granted interview with the senior management of the organisations in which they are looking to invest. This allows them to gather a better understanding of the company before making the decision whether to buy, sell or hold the counter.
Liquidity
When we use cash to make an investment it is important to know that if we need cash, we can easily sell the investment without having an impact on the current market value of the investment. Unfortunately, this is not the case for all investors. Take for example an investment in a 12-month term deposit. If after 6 months you need to redeem the money to meet an unexpected financial obligation, you may be required to pay penalties to get your money back before the end of the term. Similarly, an investment in property can take many months to sell. What is more, you cannot simply sell part of the property to meet your financial obligations. Most unit trusts however will allow you to redeem your investments on any given day at the prevailing unit price without penalty (except for those with withdrawal fees). In fact the Securities Commission requires that investors must receive their monies within 10 days of making the request, and the value of the redemption will be based on the prevailing unit trust price on the day the request was made.
Flexibility
Unit Trust investments are not simply a means of investing in the capital markets. Unit trusts can be thought of as an investment package with a number of options available. One of the most useful product options is the availability of regular investment plans. Regular investment plans allow the investor to commit to a series of regular investments over a long period of time by investing an initial sum of money, followed by a standing instruction to their banking institution to continue to transfer money at monthly intervals into trust company or a number of post dated cheques. By committing to an ongoing stream of investments you not only benefit from slowly accruing large sums of money with small regular investments, but also benefit from Dollar Cost Averaging.
Ringgit Cost AveragingI
Is an investment technique which helps you smooth the art of your investments over time. By investing a fixed sum on a regular basis you buy more units in the fund when the unit price is low and less when the price is higher. As such the need to be able to time the investment market is reduced.
Another useful product option on unit trusts is distribution reinvestment plans. In order to benefit from compound returns - that is, returns on your returns, you must reinvest your distribution. With direct shares investment this is usually quite difficult as often the option is for you to receive a dividend cheque. This means that to benefit from compounded returns you will have to cash the cheque and then buy more shares with the proceeds. This is not only administratively cumbersome, but for smaller investments it is also often impossible as the dividend is too small to buy any additional lots.
With unit trusts however, you can elect for your distribution to be automatically reinvested the day following the distribution, no matter how small the distribution.
Diversification
Professional Investment Management
Liquidity
Flexibility
Ringgit Cost Averaging
Diversification
We all know that the best way to reduce risk is not to put all your eggs in one basket. This is especially true of investing in the sharemarket. If we invest in any one or two counters, a significant downward shift in one of these stocks will have a large impact on your total portfolios. By spreading your investments across a range of companies in different industries the risk of adverse movements on a particular stock hurting your overall portfolio return is minimized. Unit trust portfolios enable you to more easily reduce this stock specific risk by pooling your funds with others and investing them across a range of companies. One must be careful however not to invest too widely as this may actually reduce the potential to outperform the overall investment market. Modern portfolio theory suggests that 20-40 stocks is often enough to minimize portfolio risk in any given sharemarket
Professional Investment Management
Having investment professionals manage money for you, even if you only have a small amount of money to invest is probably the key benefit to investing in unit trusts. Most of us do not have the time to research the companies in which we might invest. As such if we are investing in the share market directly for ourselves we may be making decisions that are not that well informed. Professional unit trust fund manager however, devote all their time to researching and analysing the various investment markets and companies. Furthermore, as they usually have large sums to invest, they will often be granted interview with the senior management of the organisations in which they are looking to invest. This allows them to gather a better understanding of the company before making the decision whether to buy, sell or hold the counter.
Liquidity
When we use cash to make an investment it is important to know that if we need cash, we can easily sell the investment without having an impact on the current market value of the investment. Unfortunately, this is not the case for all investors. Take for example an investment in a 12-month term deposit. If after 6 months you need to redeem the money to meet an unexpected financial obligation, you may be required to pay penalties to get your money back before the end of the term. Similarly, an investment in property can take many months to sell. What is more, you cannot simply sell part of the property to meet your financial obligations. Most unit trusts however will allow you to redeem your investments on any given day at the prevailing unit price without penalty (except for those with withdrawal fees). In fact the Securities Commission requires that investors must receive their monies within 10 days of making the request, and the value of the redemption will be based on the prevailing unit trust price on the day the request was made.
Flexibility
Unit Trust investments are not simply a means of investing in the capital markets. Unit trusts can be thought of as an investment package with a number of options available. One of the most useful product options is the availability of regular investment plans. Regular investment plans allow the investor to commit to a series of regular investments over a long period of time by investing an initial sum of money, followed by a standing instruction to their banking institution to continue to transfer money at monthly intervals into trust company or a number of post dated cheques. By committing to an ongoing stream of investments you not only benefit from slowly accruing large sums of money with small regular investments, but also benefit from Dollar Cost Averaging.
Ringgit Cost AveragingI
Is an investment technique which helps you smooth the art of your investments over time. By investing a fixed sum on a regular basis you buy more units in the fund when the unit price is low and less when the price is higher. As such the need to be able to time the investment market is reduced.
Another useful product option on unit trusts is distribution reinvestment plans. In order to benefit from compound returns - that is, returns on your returns, you must reinvest your distribution. With direct shares investment this is usually quite difficult as often the option is for you to receive a dividend cheque. This means that to benefit from compounded returns you will have to cash the cheque and then buy more shares with the proceeds. This is not only administratively cumbersome, but for smaller investments it is also often impossible as the dividend is too small to buy any additional lots.
With unit trusts however, you can elect for your distribution to be automatically reinvested the day following the distribution, no matter how small the distribution.
Investment In Unit Trust
The Role of Regulator
The Securities Commission Act 1993 provides that the Securities Commission (SC) is responsible for regulating all matters relating to unit trust schemes.
The SC has drawn up a set of Guidelines on Unit Trust Funds (Guidelines) to ensure a fair and consistent application of policies in considering proposals by management companies of unit trust funds.
The Guidelines are formulated with the objective of providing a regulatory framework that would protect the interests of the investing public and facilitate an orderly development of the unit trust industry. The requirements of the Guidelines are to be complied with by all parties involved in a unit trust scheme.
In addition to the above Act and Guidelines, all unit trust management companies must comply with the Companies (Amendments) Act 1997, the Securities Industry Act 1983 and Trustee Act 1949.
The Role Of The Trustee
Whatever may happen to their performance over time, unit trust managers have a reputation for the stability of their funds that is second to none. Much of this is due the legal framework in which they operate. The government lays down strict rules that unit trusts have to follow and the machinery for ensuring that this is done. Every individual fund has its own independent trustee, although for administrative simplicity, it is not unusual for unit trust management companies to engage one trustee for all funds. The trustee can be the Public Trustee of Malaysia or any independent trustee of Malaysia or any independent trustee companies.
The trustee's primary role is to see that the terms of the fund's deed are adhered to. The deed is a set of rules under which the trust is run, setting out such things as the investment scope of the fund.
The funds' assets are always in the custody of the trustee. Although the manager makes the decisions about the management of those assets, when to buy and sell, he cannot get his hands on them directly. This system ensures that the funds will not be used for fraudulent purposes. The manager has to deal via the trustee who will ensure that the day-to-day work of running the trust, the funds' accounts, valuations and calculations of unit prices are carried out properly and in accordance with both the deed and the rules laid down by the SC.
The trustee is also responsible for seeing that all the relevant paperwork is carried out. The trustee takes responsibility for overseeing the creation and cancellation (release) of units in the fund. The Guidelines also stipulate that unit trust managers have to produce semi annual and annual reports to its unitholders.
Where Would The Trust In Units Be Without The Trustee ?
Guidelines On Unit Trust Funds
In addition to the regulatory and safeguarding roles of the Regulator and Trustee respectively, the Guidelines provide additional safety features to protect the interest of the investing public. The Guidelines describe the characteristics of the investments permitted as opposed to prescribing the investments (which was previously investment in authorised Malaysian assets only) Furthermore, the Guidelines also reinforce the safety net by ensuring the funds are not overly exposed to high risk stocks and any single group of companies.
The Guidelines are subject to review by the Securities Commission as and when it deems fit and necessary to protect and ensure the growth of the industry.
The Federation of Malaysian Unit Trust Managers (FMUTM)
The first unit trust fund in Malaysia was launched in 1959. Who would then have imagined that years later there would be billions of ringgit in funds under management?
The rapid growth of the industry in recent years has led to the formation of the Federation of Malaysian Unit Trust Managers on 7 August 1993.
The Federation was set up with four objectives :
a. To promote the industry
b. To agree on standards of practice for the protection of the interests of unitholders.
c. To maintain the good name of the industry
d. To improve regulations, tax and other rules affecting the sales of unit trusts.
The Federation is represented by most of the unit trust managers in the Industry.
The Securities Commission Act 1993 provides that the Securities Commission (SC) is responsible for regulating all matters relating to unit trust schemes.
The SC has drawn up a set of Guidelines on Unit Trust Funds (Guidelines) to ensure a fair and consistent application of policies in considering proposals by management companies of unit trust funds.
The Guidelines are formulated with the objective of providing a regulatory framework that would protect the interests of the investing public and facilitate an orderly development of the unit trust industry. The requirements of the Guidelines are to be complied with by all parties involved in a unit trust scheme.
In addition to the above Act and Guidelines, all unit trust management companies must comply with the Companies (Amendments) Act 1997, the Securities Industry Act 1983 and Trustee Act 1949.
The Role Of The Trustee
Whatever may happen to their performance over time, unit trust managers have a reputation for the stability of their funds that is second to none. Much of this is due the legal framework in which they operate. The government lays down strict rules that unit trusts have to follow and the machinery for ensuring that this is done. Every individual fund has its own independent trustee, although for administrative simplicity, it is not unusual for unit trust management companies to engage one trustee for all funds. The trustee can be the Public Trustee of Malaysia or any independent trustee of Malaysia or any independent trustee companies.
The trustee's primary role is to see that the terms of the fund's deed are adhered to. The deed is a set of rules under which the trust is run, setting out such things as the investment scope of the fund.
The funds' assets are always in the custody of the trustee. Although the manager makes the decisions about the management of those assets, when to buy and sell, he cannot get his hands on them directly. This system ensures that the funds will not be used for fraudulent purposes. The manager has to deal via the trustee who will ensure that the day-to-day work of running the trust, the funds' accounts, valuations and calculations of unit prices are carried out properly and in accordance with both the deed and the rules laid down by the SC.
The trustee is also responsible for seeing that all the relevant paperwork is carried out. The trustee takes responsibility for overseeing the creation and cancellation (release) of units in the fund. The Guidelines also stipulate that unit trust managers have to produce semi annual and annual reports to its unitholders.
Where Would The Trust In Units Be Without The Trustee ?
Guidelines On Unit Trust Funds
In addition to the regulatory and safeguarding roles of the Regulator and Trustee respectively, the Guidelines provide additional safety features to protect the interest of the investing public. The Guidelines describe the characteristics of the investments permitted as opposed to prescribing the investments (which was previously investment in authorised Malaysian assets only) Furthermore, the Guidelines also reinforce the safety net by ensuring the funds are not overly exposed to high risk stocks and any single group of companies.
The Guidelines are subject to review by the Securities Commission as and when it deems fit and necessary to protect and ensure the growth of the industry.
The Federation of Malaysian Unit Trust Managers (FMUTM)
The first unit trust fund in Malaysia was launched in 1959. Who would then have imagined that years later there would be billions of ringgit in funds under management?
The rapid growth of the industry in recent years has led to the formation of the Federation of Malaysian Unit Trust Managers on 7 August 1993.
The Federation was set up with four objectives :
a. To promote the industry
b. To agree on standards of practice for the protection of the interests of unitholders.
c. To maintain the good name of the industry
d. To improve regulations, tax and other rules affecting the sales of unit trusts.
The Federation is represented by most of the unit trust managers in the Industry.
Frequently Asked Questions
1)Why would I want to invest in unit trust?
· Professional Investment Services
· Diversification Opportunities
· Affordable
· Convenience
· Liquidity
2)What are the types of investment plans available?
· Cash - Lump Sum Investment or Cash Plan
· Cash - Regular Investment Plan (Auto Debit or Standing Instruction via Bank Accounts / Auto Payment via CIMB Credit Card)
· EPF Investment Scheme
· Loan Plan
3)What is a Regular Investment Plan via Autodebit or Standing Instruction via Bank Accounts / Auto-Payment via CIMB Bank Credit Card?
It is a facility that allows you to auto deduct a fixed amount of money every month from your bank accounts or credit card for the purpose of investing into specific unit trust funds. The banks that offer such a facility with CIMB Wealth Advisors and their respective dates of deduction are as follows:
Autodebit or Standing Instruction via Bank Accounts:
· Maybank : Every 14th or 28th of the month
· CIMB : Every 10th or 20th of the month
· BSN : Every 5th or 19th of the month
· EON : Every 8th or 16th of the month
· RHB : Every 12th or 25th of the month
Auto Payment via CIMB Bank Credit Card: Every 7th of the month
4) Who can Invest?
· Malaysian or Non- Malaysian (expatriate working / residing in Malaysia) individuals age18 years and above.
· Malaysian or Non-Malaysian with registered Company or incorporated bodies, operating in Malaysia.
Note: All businesses operating in Malaysia must register with ROC / ROB.
5) Where can I invest?
· CIMB Wealth Advisors’s home office in Damansara Utama
· CIMB Wealth Advisors’s regional / branch offices
· CIMB Wealth Advisors’s sales offices
If you would like us to send someone to personally assist you, please contact our Customer Care Centre at 03 – 7718 3000.
6) Will I get a confirmation on my unit trust investment?
Yes. You will receive the following:
· Confirmation Advice Slip (CAS) for every investment (excluding Auto Debit which will be sent to you by ordinary mail)
· Yearly Statement of Account
· Unit Split Statement / Distribution Statement (if any)
7) Where can I find information on unit trust pricing?
You can find the information in the newspapers (e.g. The Star or The New Straits Times) or you may get it from our website at http://www.cimb-wealthadvisors.com/ or call our Customer Care Centre at 03–7718 3000.
8)What are the types of returns from unit trust investment?
The returns on investment for unitholders are usually in the form of capital appreciation & distributions through income generated from the portfolio of the assets held by the unit trust funds.
9)How often will I get the financial reports?
You will be informed of the performance of the Fund that you have invested in through an audited annual report for the financial year-end of the Fund and an unaudited interim report (applies to a six-month period). These reports will be sent to you within two months of the two stated periods. You may also refer to the copy of the annual or interim report posted in the Corporate Website.
· Professional Investment Services
· Diversification Opportunities
· Affordable
· Convenience
· Liquidity
2)What are the types of investment plans available?
· Cash - Lump Sum Investment or Cash Plan
· Cash - Regular Investment Plan (Auto Debit or Standing Instruction via Bank Accounts / Auto Payment via CIMB Credit Card)
· EPF Investment Scheme
· Loan Plan
3)What is a Regular Investment Plan via Autodebit or Standing Instruction via Bank Accounts / Auto-Payment via CIMB Bank Credit Card?
It is a facility that allows you to auto deduct a fixed amount of money every month from your bank accounts or credit card for the purpose of investing into specific unit trust funds. The banks that offer such a facility with CIMB Wealth Advisors and their respective dates of deduction are as follows:
Autodebit or Standing Instruction via Bank Accounts:
· Maybank : Every 14th or 28th of the month
· CIMB : Every 10th or 20th of the month
· BSN : Every 5th or 19th of the month
· EON : Every 8th or 16th of the month
· RHB : Every 12th or 25th of the month
Auto Payment via CIMB Bank Credit Card: Every 7th of the month
4) Who can Invest?
· Malaysian or Non- Malaysian (expatriate working / residing in Malaysia) individuals age18 years and above.
· Malaysian or Non-Malaysian with registered Company or incorporated bodies, operating in Malaysia.
Note: All businesses operating in Malaysia must register with ROC / ROB.
5) Where can I invest?
· CIMB Wealth Advisors’s home office in Damansara Utama
· CIMB Wealth Advisors’s regional / branch offices
· CIMB Wealth Advisors’s sales offices
If you would like us to send someone to personally assist you, please contact our Customer Care Centre at 03 – 7718 3000.
6) Will I get a confirmation on my unit trust investment?
Yes. You will receive the following:
· Confirmation Advice Slip (CAS) for every investment (excluding Auto Debit which will be sent to you by ordinary mail)
· Yearly Statement of Account
· Unit Split Statement / Distribution Statement (if any)
7) Where can I find information on unit trust pricing?
You can find the information in the newspapers (e.g. The Star or The New Straits Times) or you may get it from our website at http://www.cimb-wealthadvisors.com/ or call our Customer Care Centre at 03–7718 3000.
8)What are the types of returns from unit trust investment?
The returns on investment for unitholders are usually in the form of capital appreciation & distributions through income generated from the portfolio of the assets held by the unit trust funds.
9)How often will I get the financial reports?
You will be informed of the performance of the Fund that you have invested in through an audited annual report for the financial year-end of the Fund and an unaudited interim report (applies to a six-month period). These reports will be sent to you within two months of the two stated periods. You may also refer to the copy of the annual or interim report posted in the Corporate Website.
What is Unit Trust?
A unit trust fund is a collective investment scheme, which pools the savings of investors with similar investment objectives in a special "trust" fund managed by professional fund managers. The pooled monies in the unit trust fund will then be invested in a diversified portfolio of securities and other assets in accordance with the unit trust fund's investment objectives and as permitted under the Securities Commission's (SC) Guidelines on Unit Trust Funds.
Particular advantages of unit trusts over the pooled investments include :
· The provision of an independent trustee to hold the trust's assets on behalf of unitholders and to watch over their interests on an on-going basis.
· The deed and prospectus are scrutinised by government authorities, prior to an offer of units being made to the general public. The managers and trustee are themselves approved by the regulators.
· A buy back provision or covenant in each deed which requires the manager to redeem an investor's units within specified time limits at a price determined in accordance with the deed.
Provisions in the deed under which the manager and trustee are in a fiduciary position in relation to the trust (i.e. they can only profit in ways laid down under the deed). The investor can determine in advance what costs and charges they will be required to pay to join and stay in the trust.
The investment scheme of a unit trust fund can be illustrated as a tripartite relationship between the manager, the trustee and the unitholders.
The manager is responsible for the management and operations of the unit trust fund whilst the trustee holds all the assets of the unit trust fund. The obligations and rights of each of the three parties are specified in the Deed, (a legal document entered into between the manager and the trustee, and registered with the SC). The Deed regulates the duties and responsibilities of the manager and the trustee with regard to the operations of the trust fund and protects the unitholders' interests.
In brief, unit trust is constituted through a document known as a deed which brings together and binds the various parties to the deed :
· The trustee, who holds the assets of the trusts on behalf of the unitholders.
· The manager, who is the promoter of the scheme and provides investment and administrative expertise and markets units to the public
· The unitholders who provide the funds for investment and expect to receive the benefits derived from the investment. The effect of dividing the beneficiaries' interest in the trust into units is that their interest is quantified into discrete portions.
Particular advantages of unit trusts over the pooled investments include :
· The provision of an independent trustee to hold the trust's assets on behalf of unitholders and to watch over their interests on an on-going basis.
· The deed and prospectus are scrutinised by government authorities, prior to an offer of units being made to the general public. The managers and trustee are themselves approved by the regulators.
· A buy back provision or covenant in each deed which requires the manager to redeem an investor's units within specified time limits at a price determined in accordance with the deed.
Provisions in the deed under which the manager and trustee are in a fiduciary position in relation to the trust (i.e. they can only profit in ways laid down under the deed). The investor can determine in advance what costs and charges they will be required to pay to join and stay in the trust.
The investment scheme of a unit trust fund can be illustrated as a tripartite relationship between the manager, the trustee and the unitholders.
The manager is responsible for the management and operations of the unit trust fund whilst the trustee holds all the assets of the unit trust fund. The obligations and rights of each of the three parties are specified in the Deed, (a legal document entered into between the manager and the trustee, and registered with the SC). The Deed regulates the duties and responsibilities of the manager and the trustee with regard to the operations of the trust fund and protects the unitholders' interests.
In brief, unit trust is constituted through a document known as a deed which brings together and binds the various parties to the deed :
· The trustee, who holds the assets of the trusts on behalf of the unitholders.
· The manager, who is the promoter of the scheme and provides investment and administrative expertise and markets units to the public
· The unitholders who provide the funds for investment and expect to receive the benefits derived from the investment. The effect of dividing the beneficiaries' interest in the trust into units is that their interest is quantified into discrete portions.
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